Owners of real estate assets frequently contract with other entities to manage the real estate and/or to provide upkeep, maintenance, security, and other preservation and protection services. The entities that manage real estate often need to communicate with the owners of the real estate to obtain approvals for services to be performed. Such communications may occur, for example, between a real estate management company and an owner of real estate assets, between a preservation and protection company and a lending institution that owns real estate assets through foreclosures, or between a lending institution and a marketing and management contractor that works on behalf of the U.S. Department of Housing and Urban Development (HUD).
The general preservation and protection scenario is illustrated by the procedures and programs implemented by HUD. HUD and the Federal Housing Administration (FHA), which is a part of HUD, provide a mortgage insurance program through which lenders can obtain protection against losses as the result of homeowners defaulting on their mortgage loans. Through this program, FHA-approved lenders can offer FHA-insured loans to homeowners that meet certain qualifications. The mortgage process for an FHA-insured loan generally proceeds in the same manner as an ordinary home loan, except that the lender bears less risk because. FHA will pay a claim to the lender in the event of a homeowner's default. In the event a default occurs, ownership of the home reverts to HUD once the lender has performed the necessary, foreclosure or trust sale procedures.
The lender, however, has certain duties in connection with the foreclosure or trust sale. For example, the lender is required to avoid undue delay in initiating the foreclosure process, to convey the property to HUD within a certain period after foreclosure, to protect and preserve the condition of the property prior to conveyance, to ensure clear title to the property within a certain period after conveyance, and to submit claims for reimbursement of expenses within a certain period after conveyance.
In protecting and preserving the property, certain expenditures are pre-approved for reimbursement. Thus, HUD will reimburse the lender for certain pre-approved preservation and protection (P&P) expenditures. In many cases, however, there is a need for repairs and/or maintenance that is not pre-approved or that is in excess of the pre-approved expenditure limits. In such a case, the lender must obtain approval to perform additional work. Without such approval, HUD will not reimburse expenses in excess of the applicable limits. In addition, the lender can be charged interest if it does not perform tasks within the specified time frames. If circumstances prevent the lender from complying with the time limitations, the lender can avoid interest charges if it obtains an extension.
Lenders obtain approvals for over-allowable expenditures and extensions from marketing and management (M&M) contractors, who contract with HUD to market and manage HUD's property inventory. The process of obtaining approvals can be time-consuming and, unless the process runs smoothly, can prevent lenders from complying with the time limitations imposed by HUD, especially if the applicable over-allowable request forms or extension request fauns are not properly completed (e.g., because of the delay caused by the lender submitting the request, the M&M contractor identifying and informing the lender of the error or omission, and the lender rectifying the error or omission). The submission and processing of these request forms has been improved through the use of web services that allow the lender to electronically submit the request forms and that facilitate communications between the lender and the M&M contractor. Although the use of web services somewhat streamlines the approval process, problems can still arise that cause delays in obtaining approval.